Due to sanctions pressure, some developers are forced to revise their own development strategies.
According to the reporter MorningNews Recent occurrences have led to several large development firms deciding to temporarily halt construction of certain projects.
The findings of the survey conducted by the intersectoral association of self-regulators in the construction and design industry, known as “Synergy”, which we were able to review “Kommersant”report that disruptions in supply chains due to geopolitical events, including material shortages and significant price hikes, have led 40% of developers to halt construction of some iconic projects.
Furthermore, an additional 29% of respondents who did not experience material shortages still chose to postpone recently initiated construction. The survey involved top executives from over a thousand construction and design companies.
Incidentally, as per Izvestiain Russia, sales of construction and repair goods, tools, and experts attribute this to higher prices and concerns about potential product range reductions.
Kommersant, citing Hussein Pliyev, CEO of the Smart Engineering Group, reports that prices for several building materials have risen by an average of 80% over the past month. He believes that this increase was influenced not only by the exchange rate but also by material shortages.
How might this impact project delivery times?
The head of the strategic consulting department at Jones Lang Lasalle, Yulia Nikulichev, whose comments are also cited by Kommersant, suggests that the current situation may serve as a convenient excuse for developers to justify project delays or postponements, but it could actually be masking deeper issues within the company.
Irina Dobrokhotova, chair of the board and director of Best Novostroy, asserts that construction postponements are unavoidable in the high-budget housing market, where swiftly replacing supply chains for imported components affected by sanctions measures will be challenging. It is possible that the number of residential projects launched this year may decrease.
Is support necessary?
It is worth noting that in light of events related to Ukraine, LPR, and DPR, several countries have imposed new sanctions on Russia. Some Russian companies and individuals (including various businessmen and politicians) have been targeted by these sanctions.
For instance, the US Treasury announced about adding the State Duma to the sanctions list. Unfortunately, the energy sector has not been immune to these developments. But is Russia determined to counter the sanctions?
For instance, the Minister of Construction, Irek Fayzullin, recently stated declaredthat the head of state has already signed two sets of anti-crisis measures, which include provisions for supporting the construction industry.
He also mentioned that the ministry is actively contributing to the government's efforts to devise measures aimed at bolstering the resilience of the domestic economy, supporting citizens, the industry, and housing and utilities.
“This work is carried out on an ongoing basis, almost continuously,” he said.
“Decisions regarding the construction industry and the housing and communal sector regularly supplement the set of anti-crisis measures, and they will also be reflected in the so-called “third package”. Separate measures in terms of supporting the construction industry were also included in the draft priority action plan, which is a flexible document that will be constantly updated depending on the development of the situation,” he added.
